Contents What Corporate Restructuring in Malta Really Means The Most Common Mistakes in Malta Restructurings (and Their Costs) Malta Tax Law for International Groups: What You Need to Know Step-by-Step: Planning a Legally Secure Restructuring ATAD, BEPS, and EU Directives: Headache-Free Compliance Practical Implementation: From Planning to Starting Operations Costs, Timeline, and Realistic Expectations Frequently Asked Questions What Corporate Restructuring in Malta Really Means Let me shatter the illusion right up front: Corporate restructuring in Malta is not the quick tax-saving miracle some consultants promise. It’s a complex, long-term process that only makes sense for certain types of corporate structures. Over the last three years, I’ve overseen more than 40 restructurings—and seen far more tears than champagne corks popping. Corporate Restructuring Malta: The Basics Corporate restructuring means reorganizing your company’s structure with Malta as a strategic base. This can take several forms: Holding Company: A Maltese company takes on equity interests in operating companies IP Holding: Intellectual property is transferred to a Maltese company Finance Company: Group financing is channeled through Malta Operational Relocation: Business activities are actually moved to Malta The key lies in Malta’s EU membership combined with an attractive tax system. Malta’s corporate tax rate is 35%, but—and this is the crucial part—there’s a sophisticated refund system (the imputation system) that can reduce the effective tax burden to between 5% and 10%. Why Malta? Malta offers a unique mix: EU member since 2004 English legal system and English as an official language Over 70 double taxation agreements Strategic position between Europe, Africa, and the Middle East Stable political environment But be warned: What worked seamlessly in 2018 is now under increasing scrutiny. The EU Anti-Tax Avoidance Directive (ATAD) and international BEPS regulations have fundamentally changed the rules of the game. Who Does Corporate Restructuring in Malta Make Sense For? Not every business will benefit from a Maltese structure. In my experience, it’s worthwhile for: Type of Company Annual Revenue Potential Tech company with IP From €5 million High International holding From €10 million Very High E-commerce From €3 million Medium Financial services From €15 million High Local craft business Any Very Low The golden rule: If your tax savings aren’t at least three times higher than your annual compliance costs, don’t do it. The Most Common Mistakes in Malta Restructurings (and Their Costs) For years, I’ve been collecting horror stories from failed Malta structures. The costliest mistakes happen not during implementation, but in the planning stage. Here are the top 7 pitfalls even savvy entrepreneurs fall into: Mistake #1: Substance-Less Shell Company The classic: You set up a Maltese company, send someone to Valletta for a board meeting every six months for two days and think that’s enough “economic substance.” The reality: Malta’s Inland Revenue Department (IRD) and even German tax auditors will look very closely. Under the new EU anti-tax avoidance rules, you must be able to prove that your Maltese company actually performs genuine economic activities. What it costs: A German tax audit can result in a penalty of 20-40% of your supposed tax savings, plus interest and fines. Mistake #2: Misjudging Substance Requirements Malta sets concrete substance requirements for certain activities: IP Holding: At least 2 full-time employees with relevant qualifications Finance business: Adequate office space and qualified staff Holding activities: Active management of shareholdings, supported by documented decisions A mid-sized IT company from Munich wanted to operate software licenses through Malta. Their assumption: a local managing director would suffice. Reality: they needed two full-time developers in Malta to meet substance requirements. Additional cost: €120,000 per year. Mistake #3: Underestimating Compliance Costs Malta might be small, but the bureaucracy is not. Here’s a realistic estimate for a typical holding structure: Cost Item Annually One-Off Tax advisory Malta €15,000-25,000 – Legal advice €8,000-15,000 €25,000-40,000 Local managing director €35,000-50,000 – Office costs €12,000-20,000 – Bookkeeping/Audit €8,000-12,000 – Total €78,000-122,000 €25,000-40,000 Mistake #4: Timing the Restructuring Many underestimate how long it takes to set up a legally sound restructuring. My record is 14 months—from the first consultation to an operational Malta structure. Why so long? Tax clearance upfront: 2-4 months Company formation in Malta: 4-8 weeks Transfers/restructuring: 6-12 months Building operational substance: 3-6 months A Frankfurt fintech wanted to “quickly restructure” by fiscal year-end. Started in October, completed in March of the following year. The delay cost them an extra tax period. Mistake #5: Ignoring German Controlled Foreign Company (CFC) Rules Germany’s Controlled Foreign Company rules are a minefield. Simply put: if your Maltese company mainly receives passive income (interest, royalties, dividends) and you as a German taxpayer own more than 50%, Germany may still tax the profits. The trap: Many believe Malta structures are “automatically safe.” Reality: You need watertight planning to sidestep CFC rules. Mistake #6: Poor Transfer Pricing Documentation If you move business activities or IP to Malta, you must show that prices between group companies are arm’s length. This is called transfer pricing. What goes wrong: Companies set royalty fees or management charges too high. During a tax audit, this leads to painful adjustments. My tip: Invest in a professional transfer pricing study from the very start. It costs €15,000-25,000, but could save you six-figure back payments. Mistake #7: Underestimating Malta’s Internal Complexity Malta may be in the EU, but local quirks can bite: Minimum capital: Holding companies often need more equity than the legal minimum of €1,165 Local directors: At least one director must be a resident in Malta Management: Board meetings must actually take place in Malta Accounting standards: IFRS or Maltese GAAP, not German HGB What does this mean for you? Allow at least 18 months for a clean restructuring and expect total costs of €200,000-400,000 in the first two years. Sounds a lot? It is. But for the right business size, it pays off. Malta Tax Law for International Groups: What You Need to Know Malta’s tax system is like a Swiss watch—complex, yet brilliantly engineered. The problem: most people only grasp the basics and overlook critical details. Let me break down the system as I do for my clients. Understanding Malta’s Imputation System Malta levies 35% corporate tax on all profits. So far, so normal. Here’s the key: when the Maltese company distributes dividends, shareholders can reclaim up to 6/7 of the tax paid. Example calculation: Maltese company profit: €100,000 Corporate tax (35%): €35,000 Profit remaining: €65,000 Dividend to shareholders: €65,000 Tax refund (6/7 of €35,000): €30,000 Effective tax: €5,000 (5%) But this only works under certain conditions and depends heavily on the source of your income. The Imputation System’s Different Accounts Malta maintains different “accounts” for different income types. That matters, since the refund rate depends on it: Account Type of Income Refund Rate Effective Tax FTA (Final Tax Account) EU dividends/capital gains 100% 0% FIA (Final Investment Account) Certain investment gains 6/7 (approx. 85.7%) 5% ITA (Irish Tax Account) Passive income 6/7 (approx. 85.7%) 5% MTA (Maltese Tax Account) Active business income 6/7 (approx. 85.7%) 5% NTA (No Tax Account) Non-taxable income 0% 35% Important note: Assigning income to the right account isn’t always straightforward—and rules change regularly with new case law and administrative guidance. Malta Non-Dom Status for Individuals If you move to Malta as an entrepreneur, non-dom status comes into play. That means: Maltese income: Fully taxable (up to 35%) Foreign income: Only taxed if remitted to Malta (remittance basis) Minimum tax: €5,000 per year (from 2024: €15,000 for high earners) This only applies if you genuinely live in Malta—not just own a second home. Maltese authorities check this very carefully. Tactical Use of Double Tax Treaties Malta has over 70 double taxation treaties (DTTs). These not only prevent double taxation but also reduce withholding taxes. Example Germany-Malta: Dividends: 5% withholding tax (instead of 26.375% in Germany) Interest: 0% withholding tax Royalties: 0% withholding tax But beware: Treaties only help if the Maltese company is tax resident in Malta. Pure incorporation is not enough. EU Directives: Parent-Subsidiary & Interest-Royalty Directive As an EU member, Malta benefits from key European tax directives: Parent-Subsidiary Directive: Dividends between EU companies are generally exempt from withholding and income tax Interest & Royalties Directive: Interest and royalties between related EU companies are exempt from withholding tax This makes Malta especially attractive for holding structures within the EU. But again: you must have genuine economic substance. Current Developments & Risks Malta’s tax system is under pressure. Key developments: EU state aid cases: The EU Commission has already ruled several Maltese tax advantages as unlawful state aid OECD BEPS: New international standards to prevent profit shifting Global Minimum Tax: From 2024, large multinationals must pay at least 15% tax My advice: Structures that work today might be problematic in three years. Stay flexible and get regular professional advice. Practical Tax Planning: Do’s & Don’ts Do’s: Document all business decisions in Malta Maintain proper board meeting minutes Ensure key contracts are negotiated in Malta Build real economic substance Get a tax ruling from the Maltese authorities in advance Don’ts: Don’t rely on outdated tax strategies Don’t ignore German CFC rules Don’t underestimate transfer pricing requirements Don’t forget substance requirements Don’t proceed without professional advice What does it mean for you? Malta’s tax system still offers major advantages—but only if you do it right. The days of simple shell company setups are over. Now you need real substance, professional advice, and a long-term strategy. Step-by-Step: Planning a Legally Secure Restructuring Here’s where it gets practical. I’ll walk you through the process I’ve developed and refined over 40+ restructurings in recent years. Spoiler: it’s a marathon, not a sprint. Phase 1: Strategic Assessment (Months 1-2) Step 1: Analyse your current structure Before you even think about expanding to Malta, you must thoroughly assess your present situation: Document your current tax burden and structure Analyze your business model and value chain Review existing IP rights and their valuation Check international entanglements Compliance status in all jurisdictions Step 2: Potential analysis Not every structure benefits equally from Malta. I use a simple formula: Malta Potential = (Current tax burden − Malta tax burden) − Compliance costs − Implementation costs If the result is less than €100,000 per year, reconsider the project. Step 3: Draft implementation plan Draw up a basic timeline and identify critical dependencies: Phase Duration Critical Factors Assessment 2-3 months Tax evaluation Structure planning 1-2 months Legal/tax advice Company formation 1-2 months Regulatory approvals Operational implementation 6-12 months Building substance Go-live 1 month IT/processes Phase 2: Detailed Planning & Tax Ruling (Months 3-4) Step 4: Preliminary tax clearance This is where you achieve legal certainty—both in Germany and Malta: Germany: Binding information on CFC rules and transfer pricing Malta: Tax ruling for the intended structure Other countries: Clearances as required by your structure This phase can be nerve-wracking, but it’s essential. I’ve had tax rulings take 6 months because Maltese authorities asked further questions. Step 5: Define the optimum company structure Now it gets serious. You must decide: Number of companies: One or several Maltese entities? Legal form: Limited company, partnership, branch? Capital structure: Equity vs debt Shareholder structure: Direct or via an intermediate holding? A typical setup for a German tech company: Malta Holding Ltd: Holds shares in German subsidiaries Malta IP Ltd: Holds and licenses intellectual property German OpCo: Operational business in Germany Phase 3: Company Formation & Licensing (Months 5-6) Step 6: Set up Maltese company The formation is fairly straightforward, but the devil is in the detail: Reserve company name (1-2 weeks) Draft articles of association (1-2 weeks) Incorporate with MFSA (2-4 weeks) Tax registration (1-2 weeks) Open bank account (4-8 weeks—the bottleneck!) Insider tip: Opening a bank account in Malta is the biggest bottleneck. Prepare all documentation meticulously and plan 2-3 fallback banks. Step 7: Apply for required licenses Depending on the business, various licenses may be needed: Financial services: MFSA Investment Services License Gaming: Malta Gaming Authority License E-money/payment: MFSA E-Money License General: Business licence from the Local Council Licensing processes can take 3-12 months. Start early! Phase 4: Building Substance (Months 7-12) Step 8: Build operational substance This gets expensive, but it’s non-negotiable. Your checklist: Rent office premises: Real offices, not virtual addresses Hire staff: At minimum, a local managing director—often more Set up IT infrastructure: Local servers, email systems Implement accounting system: Maltese GAAP or IFRS Establish compliance framework: Board meeting rhythm, documentation Step 9: Transfer assets This is where you start moving assets to Malta in stages: Transfer IP rights: Valuation, purchase agreement, registration Transfer shareholdings: Share Purchase Agreement, compliance check Establish financing structures: Loan agreements, cash pooling Important: Every transfer has tax implications. Plan the order strategically. Phase 5: Go-Live & Operational Start (Months 13-18) Step 10: Operational implementation Now the new structure “goes live”: Update contracts: Customer and supplier agreements Adapt IT systems: Invoicing, CRM, ERP Train staff: New processes, contact persons Monitor compliance: Monthly reviews, audits Step 11: Monitoring and optimization A Malta structure is not “set and forget”: Quarterly compliance reviews Annual tax optimization Stay updated on legal changes Document transfer pricing Critical Success Factors What I’ve learned from 40+ projects: Plan conservatively: Double all time estimates Invest in quality: Good advisors save money in the long run Document everything: Every decision, every meeting Build real substance: Not just the bare minimum Stay flexible: Laws change, so should your structure What does it mean for you? Allow at least 18 months from your initial consultation to an operational Malta structure. Set realistic milestones and always have a plan B. ATAD, BEPS, and EU Directives: Headache-Free Compliance Let’s be honest: The compliance landscape for international tax setups has exploded in the last five years. What once could be handled with a good tax consultant now needs an entire team. But don’t panic—I’ll walk you through what really matters. Understanding ATAD (Anti-Tax Avoidance Directive) ATAD is the EU’s law against aggressive tax planning. Since 2019, it applies in all EU member states and has fundamentally changed the game. The most important ATAD rules for Malta structures: Rule What it means Impact on Malta Interest limitation Limits on deducting interest from debt financing Medium CFC rules Toughened controlled foreign company taxation High Exit taxation Capital gains taxation when relocating assets High General anti-abuse Stronger anti-abuse clauses Very High Hybrid mismatches Prevents double tax benefits Medium Mastering CFC Rules (Controlled Foreign Company) The beefed-up CFC rules are your biggest challenge. In short: If you control more than 50% of a foreign company that mainly earns passive income, your home country may still tax it. How to avoid CFC issues: Pass the substance test: Real economic activities in Malta Pass the management test: Effective management actually in Malta Active business exception: Focus on real operating business Tax rate test: Effective tax rate must be above a set minimum Example: A German software company licenses its software via Malta. To avoid CFC rules, it employs two full-time developers in Malta, who genuinely work on software development. Cost: €120,000 per year. Tax saving: €300,000 per year. The math works out. BEPS (Base Erosion and Profit Shifting) Actions BEPS is the OECD’s global initiative to combat profit shifting. There are 15 action points; four are especially relevant for Malta structures: BEPS Action 5: Harmful Tax Practices Malta has already had to adapt several tax regimes to comply with BEPS, including: Participation exemption for certain holdings Tonnage tax for shipping companies Certain IP regimes BEPS Action 6: Treaty Shopping You can’t just set up a mailbox company in Malta to benefit from double tax agreements. You need to: Pass the principal purpose test (PPT) Satisfy limitation of benefits (LOB) clauses Demonstrate economic substance BEPS Actions 8-10: Transfer Pricing Transfer pricing rules have been significantly tightened. You must show that prices between affiliated entities are what unrelated third parties would agree to. Practical steps: Function analysis: Which functions are performed where? Risk analysis: Where are risks borne? Asset analysis: Where are the valuable assets located? Benchmarking: Find comparable third-party transactions BEPS Action 13: Country-by-Country Reporting Multinationals with revenues above €750 million must disclose activities, profits, and taxes by country. This exposes aggressive tax structures. EU State Aid Rules: The Silent Killer EU state aid rules are often overlooked, but they’re deadly. The EU Commission has already ruled several Maltese tax rulings as unlawful state aid. Red flags for problematic structures: Tax burden below 1% Advance tax rulings with very specific advantages Structures only accessible to certain companies Artificial setups with no economic substance If the EU Commission labels a structure as unlawful state aid, you can be forced to repay all tax advantages from up to 10 years back—plus interest. Practical Compliance Strategy 1. Four-eyes principle for planning Always get two independent opinions: Maltese tax advisor for local compliance Home-country tax advisor for international issues Lawyer for structural design Transfer pricing specialist 2. Document, document, document You need a watertight documentation standard: Document Purpose Update cycle Business rationale Document business reasons Yearly Substance file Evidence of business activities Monthly Board minutes Record business decisions Quarterly TP documentation Justify transfer pricing Yearly Tax returns Show tax compliance Yearly 3. Monitoring and Early Warning System Set up a system to flag issues early: Legal updates: Monthly case law review Compliance dashboard: Quarterly KPI monitoring Tax health check: Annual structure review Regulatory radar: Early warning for legal changes The Future: Pillar Two (Global Minimum Tax) From 2024, a global minimum tax of 15% applies to large multinationals (revenue over €750 million). What it means for Malta: Effective tax rate must be at least 15% Otherwise, the home country will levy a “top-up tax” Complex calculation rules (GloBE rules) Massive documentation requirements My prediction: Many Malta structures will lose their attractiveness. Only those with real economic substance will survive. Planning Realistic Compliance Costs Here’s a realistic estimate for full compliance: Legal/tax monitoring: €15,000-25,000 per year Transfer pricing updates: €10,000-15,000 per year Compliance documentation: €8,000-12,000 per year Regulatory reporting: €5,000-8,000 per year External audits: €12,000-20,000 per year Total: €50,000-80,000 per year What does this mean? Compliance isn’t just a cost factor; it’s an investment in your structure’s sustainability. If you cut corners here, you’ll pay more later—often far more than you originally saved. Practical Implementation: From Planning to Starting Operations Theory is fine, but here’s where rubber meets the road. I’ll walk you through the actual implementation of a Malta structure—with all the highs, lows, and unexpected turns I’ve seen over the years. The Reality of Dealing with Authorities in Malta Malta is an EU member, but the island works differently. Here are my top survival tips for the bureaucratic jungle: Timing is everything: Monday–Thursday: Standard processing times Friday: Shortened hours, many offices close early Summer (July–September): Everything takes twice as long Feast days: 14 national holidays—plan accordingly The key authorities and their quirks: Authority Responsibility Processing time Noteworthy MFSA Company registration 2-4 weeks Online portal, relatively speedy Inland Revenue Tax registration 1-3 weeks Paper forms, in-person appointments Malta Enterprise Business licenses 4-12 weeks Depends on business activity Local Councils Trade license 2-6 weeks Varies widely by locality Employment Commission Work permits 4-8 weeks EU citizens usually no issues Finding Office Space: Substance vs Budget You need a real office, not just a virtual address. Here’s the reality check: Business-suitable locations: Valletta: Prestigious, expensive (€25-40/sqm per month) Sliema/St. Julians: Modern offices, good infrastructure (€20-35/sqm) Ta Xbiex: Financial district, home to many international firms (€22-38/sqm) Birkirkara: Cheaper but less representative (€12-20/sqm) At a bare minimum, you need: 50-100 sqm for a small holding (1-3 people) Dedicated internet (not just Wi-Fi) Professional mail box & reception Conference room for board meetings Parking (almost impossible in Valletta) A Hamburg-based e-commerce company tried to use a co-working space at first. At the first audit, this was deemed insufficient substance. Costs for moving into proper offices: €15,000 and three months of delays. Recruiting and Retaining Staff The Maltese job market is overheated. Finding and keeping good people is a real challenge. Typical salaries for qualified staff (2024): Position Gross Salary Add-ons Total Managing Director €45,000-65,000 €8,000-12,000 €53,000-77,000 Finance Manager €35,000-50,000 €6,000-9,000 €41,000-59,000 Compliance Officer €30,000-45,000 €5,000-8,000 €35,000-53,000 Administrative Assistant €20,000-28,000 €3,500-5,000 €23,500-33,000 Effective recruitment strategies: Use local headhunters: Know the market, but charge 15-25% of annual salary Tap expatriate networks: Many qualified expats on the island Hybrid models: Part-remote, with regular Malta presence Longer-term contracts: 2-3 year minimum, in return for higher pay Banking: The Biggest Bottleneck Opening a business bank account with Maltese banks is now a nightmare. Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements are through the roof. Required documentation (minimum): Certificate of incorporation Memorandum & articles of association Board resolution for account opening Business plan (at least 10 pages) Financial projections (3 years) Compliance manual AML/CFT procedures ID documents for all directors and beneficial owners Proof of address (not older than 3 months) Reference letters from other banks Proof of source of funds Typical account opening times: Bank of Valletta: 8-16 weeks HSBC Malta: 12-20 weeks APS Bank: 6-12 weeks Lombard Bank: 8-14 weeks My tip: Apply to three banks at the same time. One will reject you, one will take forever, and one might actually work. IT Infrastructure & Digitalization Malta is more digital than you might think, but the internet infrastructure can be tricky: Internet provider comparison: GO (Malta Telecom): Market leader, reliable but pricey Melita: Cheaper, but inferior service Epic: Newcomer, modern infrastructure For business-grade internet, budget €200-500 per month for a dedicated line. Cloud vs local infrastructure: Cloud-first approach: AWS/Azure offer good latency from Malta Local servers only when necessary: Power outages do happen Backup strategies essential: Malta is an island Accounting & Reporting Setup Malta follows IFRS or local GAAP—not German HGB. This means a different accounting logic. Software recommendations: SAP Business One: For larger structures (from €100,000 setup) Sage 50: Local standard, Malta-specific modules QuickBooks: For smaller setups, cloud-based Xero: Modern, API-friendly, international features Important: The accounting system must support VAT reporting for Malta and be compatible with the German system. Board Meetings & Corporate Governance Your board meetings must document real business decisions, not just serve as a formality. Board meeting best practices: Hold meetings quarterly in Malta at a minimum Detailed agenda with substantial topics Minutes with decision rationale Action items and follow-up Include external advisors for major decisions A typical board meeting agenda might look like this: Financial review (current figures, budget vs actual) Business development (new opportunities, market trends) Risk management (compliance updates, operational risks) Strategic planning (expansion, investments) Reporting & compliance (regulatory updates) Go-Live Checklist When everything’s ready, it’s time to go live. My checklist for the final phase: 4 weeks before go-live: Test all systems (accounting, banking, IT) Train staff Inform clients and suppliers Adapt contracts Define backup plans 2 weeks before go-live: Final testing of all interfaces Finalize legal documentation Activate communication plan Brief support team Go-live day: Set up a “war room” All key stakeholders available Monitor all critical processes Hotline for questions Daily review calls First 4 weeks post go-live: Daily monitoring Weekly review meetings Issue tracking and resolution Process optimization Document lessons learned What does this mean for you? The practical rollout of a Malta structure is complex, but doable. Plan conservatively, invest in good local partners, and be patient. Malta doesn’t run at German speed—but that’s part of its charm. Costs, Timeline, and Realistic Expectations Now for the hard numbers. I’ve analyzed costs from over 40 Malta projects—here’s the honest truth about what a professional restructuring really costs and how long it takes. Total Costs: A Realistic Overview Most consultants will only tell you setup costs. I’ll give you the full picture over three years: Type of Cost Year 1 Year 2 Year 3 Total Setup & consulting €65,000-95,000 – – €65,000-95,000 Ongoing compliance €45,000-65,000 €50,000-70,000 €55,000-75,000 €150,000-210,000 Staff & office €80,000-120,000 €85,000-130,000 €90,000-140,000 €255,000-390,000 IT & infrastructure €25,000-40,000 €15,000-25,000 €15,000-25,000 €55,000-90,000 Contingency €20,000-35,000 €15,000-25,000 €15,000-25,000 €50,000-85,000 TOTAL €235,000-355,000 €165,000-250,000 €175,000-265,000 €575,000-870,000 Important: These figures are for a medium-sized holding structure. Smaller setups cost 30-40% less; larger ones can be much more expensive. Detailed Setup Costs Here’s the breakdown of one-off implementation costs: Consulting fees (€40,000-60,000) Tax advisory Malta: €15,000-25,000 Tax advisory Germany: €10,000-15,000 Legal advice Malta: €8,000-12,000 Transfer pricing study: €7,000-15,000 Due diligence & structuring advice: €5,000-8,000 Company formation (€8,000-15,000) Registration fees: €1,500-2,500 Notary fees: €2,000-3,500 Legal drafting: €3,000-5,000 Initial capital: €1,165 (minimum) up to €50,000+ Miscellaneous: €1,000-2,000 Licenses and permits (€5,000-15,000) Business license: €500-2,000 Financial services license: €0-10,000 (if required) Tax ruling fees: €2,000-5,000 Various registrations: €1,000-3,000 Asset transfer (€10,000-25,000) IP valuation: €5,000-15,000 Transfer fees: €2,000-5,000 Registration costs: €1,000-3,000 Tax consulting: €2,000-5,000 Ongoing Costs: The Real Cost Block Setup is only the beginning. Ongoing costs determine viability: Staff (€60,000-100,000 per year) Managing director: €45,000-65,000 Compliance/admin: €25,000-35,000 Social security/benefits: €12,000-18,000 Recruitment/training: €3,000-5,000 Professional services (€35,000-55,000 per year) Ongoing tax advisory: €15,000-25,000 Legal advice: €5,000-10,000 Audit/bookkeeping: €8,000-12,000 Transfer pricing updates: €4,000-8,000 Compliance monitoring: €3,000-5,000 Infrastructure (€15,000-25,000 per year) Office rent: €8,000-15,000 IT/software: €3,000-5,000 Communications: €2,000-3,000 Insurance: €1,500-2,500 Miscellaneous: €1,000-2,000 Timeline: Realistic Expectations Here’s my detailed schedule based on average projects: Phase 1: Assessment (3-4 months) Month 1: Strategic planning, initial consultations Month 2: Tax analysis, potential review Month 3: Structure planning, pre-clearance with authorities Month 4: Tax ruling application, final structure optimization Phase 2: Implementation (6-8 months) Month 5-6: Company formation, bank account opening Month 7-8: Office search, recruiting staff Month 9-10: Asset transfer, contract adjustments Month 11-12: System setup, go-live prep Phase 3: Start of Operations (2-3 months) Month 13: Soft launch, internal processes Month 14: Full operation, client transition Month 15: Optimization, initial reviews Total duration: 15-18 months from the first consultation to full operations. ROI Calculation: When Does It Make Sense? The crucial question: At what level of tax savings is Malta worth it? Break-even analysis (3 years): Scenario Annual tax savings 3-year savings 3-year costs Net benefit Conservative €150,000 €450,000 €575,000 -€125,000 Realistic €250,000 €750,000 €650,000 +€100,000 Optimistic €400,000 €1,200,000 €750,000 +€450,000 My rule of thumb: You need at least €250,000 in annual tax savings to make Malta worthwhile in the first three years. Hidden Costs Often Overlooked Opportunity costs: Management time for Malta setup Currency risk: EUR/USD fluctuations in international business Travel costs: Regular trips to Malta for board meetings Complexity costs: More complex accounting and reporting Exit costs: In case you eventually wind down the structure Cost Optimization Strategies Where you can save (without sacrificing substance): Shared services: Compliance providers for multiple entities Hybrid models: Part-remote staff Technology first: Digital processes instead of manual work Co-location: Share offices with other Malta structures Where you shouldn’t cut corners: Tax and legal advice: Cheap is expensive Compliance documentation: Worth its weight in gold during audits Qualified staff: Don’t skimp on substance requirements IT security: The reputational risk is too high Financing Your Malta Structure High up-front costs can be a challenge. Financing options: Equity financing: Cleanest, but ties up cash flow Group loans: Mind transfer pricing rules External financing: Maltese banks are conservative Investor/partner: Give up equity for funding What does this mean for you? Malta is a long-term investment, not a quick tax scheme. Plan conservatively, expect 18 months to full operations, and a minimum of €600,000 in total costs over the first three years. But with the right business scale, it’s one of the last legal ways to achieve substantial tax optimization within the EU. Frequently Asked Questions about Malta Restructuring Are Malta structures still legal after the new EU directives? Yes, Malta structures remain legal, but requirements have increased significantly. You need real economic substance, qualified local staff, and must prove business reasons are primary. Pure tax optimization without substance no longer works. How much tax saving do I need for Malta to be worthwhile? As a rule of thumb, you should achieve at least €250,000 annual tax savings. With smaller savings, compliance costs quickly outweigh any benefits. For smaller businesses, more cost-efficient alternatives are often available. Do I really have to hire staff in Malta? Yes, for substantive business activities, local staff are mandatory. A local managing director is the minimum; for IP holdings, you often need 2-3 qualified full-time staff. Shell structures with just a nominee director are no longer viable. How long does it take until a Malta structure is fully operational? Allow 15-18 months from initial consultation to full operations. Company formation only takes 4-8 weeks, but building substance, opening bank accounts, and obtaining approvals takes much longer. What happens if the EU abolishes Malta’s tax advantages? The risk exists, but Malta has repeatedly adjusted its tax system to stay EU compliant. What’s key is a flexible structure that can adapt to changing frameworks. An exit strategy should be planned from the start. Can a Malta structure help me avoid German CFC rules? It depends on the structure. With genuinely active business activities and enough substance, you can usually sidestep CFC rules. With purely passive income (interest, dividends), it’s much harder. Careful planning is essential. Which banks in Malta are best for business accounts? Bank of Valletta and HSBC Malta are the established players, but opening an account can take 12+ weeks. APS Bank is often faster. Importantly: apply to several banks at once and prepare your documentation meticulously. Do I have to move to Malta personally? No, it’s not strictly necessary. However, you need local management and regular presence for board meetings. If you want to benefit personally from Malta’s tax perks, you need to become resident there. What does a Malta structure really cost? Expect €575,000-870,000 in total costs for the first three years—including setup, staff, office, compliance, and overheads. Ongoing costs are €150,000-250,000 per year. How complex is the accounting for a Maltese company? Far more complex than under German HGB rules. Malta follows IFRS or local GAAP. You need specialized software and qualified staff. Outsourcing to local providers costs €8,000-15,000 per year. What happens in an audit? Both German and Maltese authorities can audit your setup. Precise documentation of all business transactions, logical transfer pricing policies, and proof of real substance are crucial. Good preparation is half the battle.
